Women on Boards report

09 November 2012

Ahead of the EU’s expected announcement of legislation to tackle gender inequality in the corporate world, a Lords Committee says today that introducing mandatory quotas for the number of women on EU boards would “generate negative perceptions amongst women and business leaders and would not address the root causes of inequality”.

In its report, Women on Boards, the Lords EU Committee says that whilst they agree there is a leadership role for the EU in furthering the cause of increased equality in the boardroom, quotas would “risk setting back voluntary efforts without achieving broader gains”, and urges the Government to strongly oppose any such measure.

The Committee instead calls on the European Commission to bring forward measures to monitor the number of women in senior positions on an EU-wide basis. The Commission should also facilitate self-regulatory efforts in Member States which can highlight good and bad performers, giving voluntary efforts a chance to succeed, before quotas are considered.

Committee Chairman, Baroness O’Cathain, said:

"Although the Committee welcomes the positive steps already taken by many Member States to ensure more gender-balanced boards and senior management teams – particularly in the UK – the number of women at the top remains far too low.

More balanced boards are to everybody’s benefit. We found that they will be more able to tap into the wealth of available talent in the labour market, provide a broader spectrum of ideas and improve corporate governance. However, we are not persuaded that the only way to stimulate change is through the introduction of EU quotas.

National governments are already signed up to the benefits of more women on boards, and there has been real progress. More than a third of people appointed to FTSE 100 boards last year were women, and FTSE 100 companies are expecting to see a quarter of their board positions taken by women by 2015. Across the EU as a whole, the proportion of women on boards has risen by 16% since 2010. Business leaders and national governments need to be given a chance to build upon these efforts before we consider quotas.

The Commission should at this stage seek to support and better monitor these efforts, and only step in with stronger measures as a last resort where the business world has shown itself to be unwilling and unable to change its ways. To introduce quotas now, though, would do more harm than good and risk derailing efforts to deliver more sustainable change.

By working together in partnership, the Government and the EU can ensure that all of the talent in our jobs market is used to the full, regardless of gender."

The key recommendations from the Committee are:

a legislative quota would be unpopular with many of the women it would seek to help, and the Government should strongly oppose any such measure that emerges - a voluntary, business-led approach is the better route to long-lasting change

the European Commission should continue to show leadership on the issue of women on boards by maintaining a high profile on this issue and holding Member States to account

corporate governance regimes should be reformed to require companies to report at a national level on the proportion of women at every level of their workforce

the Commission should use the above data to determine on an annual basis if progress is being made at Member State and EU levels, and to inform possible policy responses

the principles in the UK’s code of conduct for executive search firms should be implemented on a voluntary basis across the EU.